Taking a punt vs. an educated trade

[krisbarry]

Although at times very risky…my best trading profits seem to have occurred during times of quick trades with very little thought on the stock in which I have invested in.

Using the ASX website and following the company announcements listed daily, marked “price sensitive” and taking a punt.

Sometimes you can chart it this way, chart it that way, talk it up, talk it down, and spend endless hours research the company. Then invest in it only to find out that you have made very little profit, no profit at all or even worse a loss. So all that education, long hours researching etc is it all worth it?

I still think that many aspects of an educated trade seems over-rated and clearly those in the business that trade professionally using educated trading systems still make massive losses too. They seem to use all the tools of the trade, software, talk the talk, walk the walk, use the lingo etc

Sometimes it simply comes down to the company that investors invest in. The announcements that are released and the volume entering/exiting the stock.

What do other members think?

 

[tech/a]

Re: Taking a punt vs an educated trade

I still think that many aspects of an educated trade seems over-rated and clearly those in the business that trade professionally using educated trading systems still make massive losses too. They seem to use all the tools of the trade, software, talk the talk, walk the walk, use the lingo etc

Sometimes it simply comes down to the company that investors invest in. The announcements that are released and the volume entering/exiting the stock.

What do other members think?

I agree in most part.

Most education is at best selfserving to the educator.There are howevr some very good educators---like trading gems they have to be carefully selected as well.

Massive losses (which I would quantify as over 50% of your trading capital) would be very rare in the case of disiplined mechanical traders using a proven method.But yes they are human and as such can and do do stupid things.
But I'd say 99% of the time its the fault of the trader not the method

Rather than sometimes coming down to the company or companies that investors are happy to invest in I'd say ALL THE TIME.

Frankly I think it simple let me show you all 2 charts.
Isnt the first chart simple to follow?---why is YOUR head telling you that its over bought?

First chart is 2 mths ago.

Second is now.

Same stock.

I can find countless other examples.The problem with traders is they have this need to pick the impossible----find the LOW------Get on the 100% winner that flys over the next 2 days.Make $10K(Out of 1K) today!!!!
Predict where price wcould/may be in a week or months time---WHO CARES---
if you trade it as it IS not as how it COULD be------then it becomes very simple

When everyday plenty of stocks just quietly increase in value-------When I find one of these I have NO NEED to know WHY!

 

[RichKid]

Re: Taking a punt vs an educated trade

Tech,
So you suggest that we just follow the basic TA theory that a trend is considered to continue in force until there is overwhelming evidence to the contrary. In your chart, there was a breakout and you bought the first pullback on a key reversal day (I assume support was closeby near the previous high)?

And if what you say is correct about picking the bottom, most would buy in a downtrend (still a trend but continuing in force in the wrong direction for longs) and people will often buy on a big down day or a pullback during the downtrend thinking they have picked the bottom. I'm just trying to add some technical speak to this to see if I'm getting what you say.

On a wider note Kris, we may end up getting into the random walk debate again, basically I trade with a view as to a certain pattern unfolding (ie the educated part of it for me, applying all the TA theory etc) but bet as if anything could happen (I plan for the worst via position sizing and don't whinge when it goes wrong, just take the loss). Even wiseacre investors get it wrong, we often only hear about the good stuff that they do and none of their real secrets. But the hard part as tech says is knowing you have a plan that works (and then sticking to it).

My problem is I haven't backtested what I do- no fixed parameters so I don't know my expectancy. So I try to keep my losses very small and trade the safest patterns I can find in the belief that it will help my expectancy as 'safe' would mean greater chance of successful pattern completion.

 

[money tree]

Re: Taking a punt vs an educated trade

Most education is at best selfserving to the educator.There are howevr some very good educators---like trading gems they have to be carefully selected as well.

 

[Happy]

Re: Taking a punt vs an educated trade

Punt is a punt, we win some and some we don’t.

I suppose education comes to the rescue in a form of if not maximising profit at least in minimizing the loss.

 

[tech/a]

Re: Taking a punt vs an educated trade

Rich.

My example above is just an example---

The point was that at the time of takig the first picture we would be looking for a fall---not looking for a continuation which happens with great trends---some last for years---UTB CTX ALL SFE TOL to name a few.
Get on just one of these and trading becomes a breeze---why pull out of a trade like these --JUST TO ATTEMPT TO FIND ANOTHER???

TREE

You really do think I wish to educate.
That which I write is purely from personal experience.
Its what I do. Ive had success and like to be able to help others in their pursuit.
The content which you add to the communuty certaintly doesnt have me running off parting with $$s to see what secrets or truths you can pass on to me.
It never ceases to amaze me how secretive and elusive those "educators" are when it comes to FACTS---------$$$s first FACTS later.
Personally I dont think you HAVE to spend a single $$ in learning how to make a dollar---its all on the net for FREE

Specialist advice---another story.

 

[mime]

Re: Taking a punt vs an educated trade

My trades are usually half and half. I like to watch/read media reports on external factors that will influence a certain sector of the market. However I don't really research the stock very hard I just look to see if the are profiting or not. Punting is fun. But why not do it as the races instead of the stock market?